Understanding property transfer tax is essential for anyone buying a resale home on the Costa del Sol. Here is how Andalucía's 7% ITP works, who pays and how to budget.
Buying a home on the Costa del Sol is an exciting milestone, but the headline purchase price is rarely the full story. One of the most significant additional costs facing buyers of resale property is the Impuesto sobre Transmisiones Patrimoniales, or ITP. Understanding how property transfer tax in Andalucía works on the Costa del Sol will help you budget accurately and avoid unwelcome surprises at completion.
What is ITP and when does it apply?
ITP is the tax levied on the transfer of second-hand (resale) property in Spain. It is the equivalent, in broad terms, of a transfer duty, and it is payable by the buyer rather than the seller.
The crucial distinction is between new-build and resale homes:
- Resale properties (those being sold for at least the second time) are subject to ITP.
- Brand-new properties purchased directly from a developer are instead subject to VAT (IVA) plus stamp duty (Actos Jurídicos Documentados, or AJD), not ITP.
If you are buying a previously owned villa, apartment or townhouse, ITP is almost certainly the tax that will apply to your transaction. Most buyers browsing Costa del Sol property for sale will encounter a mix of new and resale homes, so it is worth establishing early which category a particular property falls into.
The ITP rate in Andalucía
In Andalucía, the property transfer tax rate for resales is 7%. This is a flat rate applied to the taxable value of the property, which simplifies budgeting considerably compared with the tiered systems used in some other Spanish regions.
For example, on a resale property with a taxable value of €500,000, the ITP would amount to €35,000. On a €1,000,000 home, you would expect to pay €70,000 in transfer tax alone. Because the rate is a straightforward percentage, you can quickly estimate your liability for any property you are considering.
What value is the tax calculated on?
ITP is generally calculated on the higher of the agreed purchase price or the value the tax authorities consider the property to be worth. Spain uses a reference value system for many properties, and the tax office may assess a property at a figure that differs from the price stated in the deed. If the reference value is higher than the price you pay, the tax can be calculated on that higher figure.
This is an important point: do not assume the tax is always based purely on what you agree to pay. Your lawyer can check the applicable reference value before you sign, so there are no surprises when the tax falls due.
Who pays ITP and when?
The buyer is responsible for paying ITP. The tax must typically be paid within a set period after the date of the public deed of sale (the escritura signed before a notary). Your conveyancing lawyer will normally handle the calculation, preparation of the relevant tax form and payment on your behalf, often as part of the completion process.
Paying ITP correctly and on time is essential, because the property cannot be cleanly registered in your name at the Land Registry until the tax position is in order. Late payment can also trigger surcharges and interest.
How ITP fits into your total buying costs
ITP is the largest single transaction cost for most resale buyers, but it is not the only one. When budgeting for a Costa del Sol purchase, you should also allow for:
- Notary fees for the public deed of sale.
- Land Registry fees to register your ownership.
- Legal and conveyancing fees, typically charged by your lawyer.
- Mortgage costs, if you are financing the purchase, including valuation fees.
As a general rule of thumb, buyers of resale property are often advised to budget for transaction costs of somewhere in the region of 10–12% of the purchase price, with ITP forming the bulk of that figure. The exact total depends on the property, whether you use a mortgage and your professional fees, so always ask for a personalised breakdown.
A worked example
Imagine you are purchasing a resale apartment for €600,000. Your approximate costs might look like this:
- ITP at 7%: €42,000
- Notary, registry and legal fees: a further few thousand euros depending on the transaction
The ITP alone accounts for the great majority of your additional outlay. This is why it pays to factor the tax in from the very beginning of your search, rather than treating it as an afterthought once you have fallen in love with a property. Whether you are drawn to the established elegance of the Marbella area guide or the relaxed, well-connected lifestyle described in our San Pedro de Alcántara area guide, the same 7% rate applies across the region.
Two real examples at today's ITP rate:
€2,425,000 — Middle Floor Apartment, The Golden Mile. View listing — ITP at 7% would run to roughly €169,750 on top of the price.
€600,000 — Townhouse, Calahonda. View listing — a more typical resale budget, with ITP adding around €42,000.
Important point about residency
It is worth clearing up a common misconception. Until recently, Spain operated a residency-by-investment scheme often referred to as the "Golden Visa", which allowed certain property buyers to obtain residency. This scheme was abolished in April 2025. Buying property in Spain, including on the Costa del Sol, no longer grants any form of residency. ITP is a transaction tax and has no connection to immigration status; it must be paid regardless of your nationality or where you live.
If residency matters to your plans, you should take separate, specialist immigration advice, as property ownership and residency are now entirely distinct matters.
New-build properties: a different tax route
If, instead of a resale, you decide on a brand-new home directly from a developer, ITP does not apply. Instead you will pay VAT on the purchase price plus stamp duty (AJD). The combined cost can be broadly comparable to ITP, but the structure is different and the rates are set under separate rules. The key takeaway is to identify which regime applies to your chosen property as early as possible, because it affects your overall budget.
Practical tips for buyers
- Confirm the tax regime early. Establish whether the property is a resale (ITP) or a new-build (VAT plus AJD) before you make an offer.
- Check the reference value. Ask your lawyer to verify the official reference value, as ITP may be based on it rather than your agreed price.
- Budget conservatively. Allow for transaction costs of around 10–12% of the price so you are not caught short.
- Engage an independent lawyer. A qualified, independent conveyancing lawyer will manage the ITP calculation and payment and protect your interests throughout.
- Keep funds ready. ITP falls due shortly after signing, so ensure the money is available at completion.
Final thoughts
Property transfer tax is an unavoidable part of buying a resale home on the Costa del Sol, but it is also entirely predictable. With a flat 7% rate in Andalucía and clear rules on who pays and when, you can plan with confidence. The most important step is to build the tax into your budget from the outset and to work with experienced local professionals who can guide you through completion smoothly. Once the figures are clear, you are free to focus on the more enjoyable part: finding the right home in the right location.
